Two weeks before Christmas and on the cusp of passage of the Republican-sponsored corporate tax cuts that promised better pay and more jobs for workers, Comcast fired at least 500 door-to-door sales employees and required them to sign non-disclosure agreements in return for a severance package.

Managers, supervisors, and direct sales staff in Chicago, Florida, and across Comcast’s Central division — including the midwest and southeastern U.S., were abruptly terminated around Dec. 15, according to documents obtained by the Philadelphia Inquirer.

Most of the workers trudged door to door in neighborhoods and apartment complexes selling Comcast services to residential customers. Comcast has attempted to keep the layoffs quiet by requiring laid off workers to sign a non-disclosure agreement if they want a severance package. After being confronted by the newspaper, a Comcast spokesperson confirmed the layoffs.

“The Central Division is creating a new territory-based sales model that will connect more closely with residential prospects and customers in their communities,” Comcast spokeswoman Jennifer Moyer said Thursday. “By giving highly trained sales professionals direct responsibility for entire neighborhoods, we can provide a better experience for those who are interested in our services, during and after the sale.”

Because the layoffs only affect some of Comcast’s regional divisions, additional job cuts could be forthcoming if the company adopts its new sales model nationwide.

The Philadelphia Inquirer could not identify affected employees because Comcast required laid-off workers to sign Non Disclosure Agreements (NDAs).

Embittered employees are upset having to remain anonymous talking about their jobs disappearing just before Christmas. Comcast also gets to avoid paying the fired workers its heavily promoted $1,000 bonus because Comcast conveniently eliminated their positions shortly before announcing the bonus.

The Trump Administration promoted the corporate tax cut as a Christmas gift to the middle class, claiming it would inspire companies to add jobs and boost worker pay. At Comcast, the tax cut will provide hundreds of millions in tax savings annually that are expected to be mostly returned to shareholders. Corporate executives are also expected to benefit through significantly higher bonuses tied to the increased cash on hand from tax savings and the higher value of Comcast’s stock. Comcast has made no commitments about hiring new workers, but did claim it would invest up to $50 billion in its company’s operations, which is roughly comparable to what Comcast traditionally spent before the tax cuts were announced.

According to the newspaper, it seems Comcast treated its shocked workers with about as much sensitivity as it gives its customers:

Rumors of an employee cutback among the sales people at Comcast had been percolating for weeks. But the disclosure of the terminations came as a shock when the employees were called into a company meeting in the southeastern U.S. in mid-December.

They were told that a new Comcast direct sales system requires fewer bodies “and as of today everyone in this room does not have a job anymore,” the terminated Comcast employee said.

One employee kept holding his head and saying “I can’t believe it. I can’t believe it.” Another worried about how to find new health-care coverage. A third employee was close to purchasing a new home and feared the personal income hit.

Comcast direct sales employees earned $50,000 to $100,000 through a low base salary and commissions, the terminated employee said. The commissions ranged between roughly $75 for a new Internet Plus customer to $350 for a new customer who ordered a triple-play package with home security, the former employee said.

“I don’t know how you do this right before Christmas.”

While giant cable company mergers unexpectedly took a breather in 2017, Fierce Cable predicts this year isn’t likely to be a repeat of last year.

“With polls showing Democrats poised to begin sweeping back into power with the 2018 midterm elections, look for cable operators to make hay on the current regulatory climate and start turning their rivals into that most precious of resources: scale,” writes Daniel Frankel.

With time for large cable operators to get easy approval of merger deals from deregulation-minded Republicans potentially running out, 2018 could bring dramatic consolidation in the cable industry, with Comcast a likely buyer and Charter Communications a potential seller… if the offer is good enough.

Many industry observers expected the first year of the Trump Administration to be a banner year for cable mergers, especially with the entry of Altice, a European cable conglomerate known for its willingness to overpay to acquire cable operators. Altice has since run into significant financial challenges and investor blowback, forcing the company to shelve acquisition plans for now and focus on debt reduction and developing a stronger business plan to operate its ailing cable and wireless properties in Europe. Altice USA, which owns Suddenlink and Cablevision, has not shelved its plans to upgrade many of its customers to fiber to the home service, but is also no longer seen as an immediate bidder for Charter, Cable One, or WideOpenWest.

Fierce Cable expects Comcast to respond to AT&T’s merger with Time Warner, Inc., assuming the deal successfully overcomes Department of Justice objections in court, and 21st Century Fox’s asset sales to Disney. Both transactions threaten to consolidate programming production and distribution around an even smaller group of media giants, which could challenge Comcast’s NBCUniversal unit as well as the cost of cable programming networks. Comcast has shied away from acquisitions after an embarrassing failure of its attempt to buy Time Warner Cable a few years ago.

If Comcast wants to build scale, it would naturally target an acquisition of Charter Communications, the second largest cable company in the country. The deal would give Comcast dominance over the New York and Los Angeles media markets and broadband service provision across most major American cities. Comcast could also seek a less controversial acquisition of Cox Communications, one of the few major independent cable companies left. But Comcast could also seek acquisitions in Hollywood to bolster its production capabilities.

Most other cable acquisition options would be considered scraps by the largest operators. Altice could be persuaded to prematurely exit the American market and sell Cablevision and Suddenlink if convinced it has no chance of building adequate scale to stand with Comcast and Charter. Beyond that are smaller rural and regional operators including Mediacom, Midco, WOW!, GTT, RCN, and many others that serve fewer than one million customers.

Company executives may be hoping the objections to the AT&T/Time Warner deal are an anomaly for the Trump Administration. But it’s clear that whatever smooth waters exist for upcoming mergers will get choppy as the midterm elections approach. Should Democrats win back the House and/or Senate, life will get considerably more difficult for future media consolidation deals.

Some of America’s top telephone and cable companies will likely pay little, if any federal taxes as a result of the passage of a Republican-sponsored tax cut plan, while some may also receive generous “refunds” based on depreciation-related expenses and future investments the companies would have made with or without changes to the tax code.

For several years in the last decade, companies with significant infrastructure expenses often did not spend a penny in federal taxes thanks to generous loopholes and incentive programs designed to encourage corporations to invest in new equipment, research, and development. The new Republican-sponsored tax cut is expected to provide a windfall of tax savings for every corporation in the country, but telecom companies are expected to do especially well with a combination of a lower corporate tax rate and the GOP’s failure to fulfill a commitment to close many of the tax loopholes and incentives that were originally designed to get companies spending during the Great Recession.

No provider has promised customers lower rates as a result of the billions of additional dollars the companies are expected to keep in the bank starting next year. In fact, there are early signs that much of the anticipated windfall will be returned to shareholders in the form of increased dividend payouts and accelerated share buyback schemes that reduce the number of shares available for sale, boosting both the sale price of the stock and executive bonus compensation tied to the price performance of the stock.

Despite that, companies including AT&T and Comcast are cranking up their PR machines to get on the good side of the Trump Administration, suggesting the new tax cuts will directly benefit middle class employees at both companies.

AT&T’s capex increased $1.1 billion to $11.2 billion for the first six months of 2017 without the tax cut legislation.

AT&T announced it would pay a one-time $1,000 bonus to its workers and invest an additional $1 billion in network upgrades as a direct result of the tax cuts.

However, a closer look reveals AT&T’s commitments to boost compensation came not as a result of the tax cut but instead from nearly a year of hard negotiations with the Communications Workers of America (CWA), one of the biggest unions representing AT&T workers.

The CWA argued that AT&T needed to follow-through on the Republican Party’s promise that passage of the tax cuts would result in higher wages for the middle class.

“Republicans, including the president, said the average household would get $4,000 under this tax plan,” CWA spokesperson Candice Johnson told The Daily Beast. In November, CWA officials began to demand $4,000 raises for AT&T workers promised by the GOP. “This bonus came out of that conversation. It’s a start, and we’re going to keep holding our leaders accountable.”

Instead of $4,000 more a year for AT&T workers as a result of the tax cut bill, the union’s influence achieved a $1,000 one time bonus and an average salary bump of 10.1%. Without pressure from the union, many AT&T employees and union officials believe AT&T would have offered little, if anything to its employees as a result of the tax cut.

AT&T’s Christmas Bonus will cost the company a fraction of the amount it risks losing if its $109 billion merger deal with Time Warner, Inc., does not survive an antitrust review by the Justice Department and the courts. The Justice Department announced its opposition to the merger. The connection between AT&T’s press release, which plays into the Trump Administration’s talking points about the tax cut law, and AT&T’s need for a friendlier response to its merger deal by administration officials, was not lost on Crane’s Chicago Business:

By now, companies have learned the art of crafting the type of upbeat, largely symbolic press releases our president loves, with enough big numbers to get them on the White House’s good side. If this time around that also means some extra money in workers’ pockets, all the better. But some of these announcements come across as more gimmicky than others, and it’s not hard to wonder if there are also other motives at work.

AT&T is angling to overcome regulatory objections to its $109 billion merger with Time Warner Inc. and either way, needs to invest in the U.S. to build out its fiber-optic cable and 5G networks. Analysts estimate AT&T’s net income will be close to $14 billion this year.

AT&T’s commitment to spend up to $1 billion additional dollars next year as a direct result of the tax cut is recycled old news, critics charge, because AT&T previously announced the same $1 billion commitment in early November. Regardless, the extra spending is a small fraction of AT&T’s overall capex budget.

In 2016, at the height of so-called “investment-killing net neutrality,” AT&T exceeded its 2016 capex forecast, spending $22.9 billion — $900,000 more than it expected. In 2017, AT&T announced it expected to spend $22 billion again this year, primarily on its wireless network and wired business solutions. The other major former Baby Bell – Verizon Communications, spent $17.1 billion in 2016 and expected to spend up to $17.5 billion this year.

AT&T’s promise to spend an additional $1 billion is a token amount, especially when considering the tax cut savings likely to be won by phone companies like AT&T and Verizon. From 2008-2015, AT&T paid an effective federal tax rate of just 8.1%, according to the Institute on Taxation and Economic Policy. It will pay considerably less under the Republican tax law, potentially saving the company billions. During the same period, Verizon paid absolutely zero federal taxes during many of those years, and in fact won a refund from the IRS because of network investments and depreciation-related savings. Because the GOP did not close many of the corporate loopholes the politicians initially promised would be ended, many telecom companies could once again pay little, if any federal tax, and may secure hefty refunds.

Source: Institute on Taxation and Economic Policy

Comcast’s $1,000 Christmas Bonus and $50 Billion Spending Commitment

Not to be outdone, Comcast has also promised a $1,000 one time Christmas bonus for its employees as a result of the passage of the GOP tax measure, along with a commitment to spend $50 billion on its business over the next five years:

Based on the passage of tax reform and the FCC’s action on broadband, Brian L. Roberts, chairman and CEO of Comcast NBCUniversal, announced that the company would award special $1,000 bonuses to more than 100,000 eligible frontline and non-executive employees. Roberts also announced that the company expects to spend well in excess of $50 billion over the next five years investing in infrastructure to radically improve and extend our broadband plant and capacity, and our television, film and theme park offerings.

Roberts

Comcast’s spending on its theme parks acquired from NBCUniversal has been especially bullish, with Roberts announcing earlier this year nearly $2 billion in spending  in 2017. In fact, Comcast’s capex spending has trended higher year after year, especially after its acquisition of NBCUniversal. In 2014, the company spent $7.2 billion on capital investments. In 2015, as net neutrality rules took effect, Comcast raised investments to $8.1 billion. In 2016, the capex budget fell slightly to $7.597 billion in 2016, but was forecast to reach $8.445 billion in 2017. Ars Technica reports that from the fourth quarter of 2016 through the third quarter of 2017, Comcast spent $9.4 billion on capital investments.

Much of that spending has been to pay for its X1 set-top box, theme park upgrades, and scaling up its broadband infrastructure to handle faster internet speeds. Earlier in 2017, Comcast also boosted its commitment to spend billions on buying back shares of its own stock, which will benefit shareholders and company executive compensation plans.

As the industry marches towards fiber upgrades and DOCSIS 3.1 deployment, Comcast’s capex forecast without the tax cuts would like come very close to Roberts’ $50 billion estimate over the next five years, assuming the company spent a reasonable average of close to $10 billion annually. Roberts said he “expects” spending at that level, but did not commit to it formally, so there is no penalty for overestimating investment numbers.

AT&T earlier noted predictions about capital investments always relate to actual need at the time and the company doesn’t spend money it does not need to spend.

“There is no reason to expect capital expenditures to increase by the same amount year after year,” AT&T said at the time. “Capital expenditures tend to be ‘lumpy.’ Providers make significant expenditures to upgrade and expand their networks in one year (e.g., perhaps because a new generation of technology has just been introduced), and then focus the next year on signing up customers and integrating those new facilities into their existing networks, and then make additional capital expenditures later, and so on.”

But there are political upsides to making no-strings-attached investment predictions anyway.

Comcast’s share repurchase program also allows the company to boost dividend payouts to shareholders.

Issuing a favorable press release that dovetails with the Trump Administration’s tax cut plan could buy Comcast goodwill from the administration as the company faces calls from Congress to extend merger deal conditions and restrictions on its 2011 acquisition of NBCUniversal. Those conditions are scheduled to expire in September 2018.

Jon Brodkin notes that telecom companies frequently tie their spending plans to regulatory matters going in their favor:

When ISPs are asking the government for a specific policy change—such as the repeal of a regulation or a tax break—they are quick to claim that the desired policy will lead to more investment.

AT&T, for example, announced last month that it would invest “an additional $1 billion” if Congress passes tax reform. With the tax reform now passed by Congress, AT&T said yesterday that it will move ahead with that $1 billion increase.

But neither one of those AT&T announcements said what the exact level of investment would have been if the tax bill wasn’t passed.

And in 2010, AT&T told the FCC that capital expenditures are based on technology upgrade cycles rather than government policy. At the time, AT&T was asking the FCC for a favor—the company wanted a declaration that the wireless market is competitive, a finding that can influence how the FCC regulates wireless carriers.

Pai

FCC Chairman Ajit Pai has gone all out to defend internet service providers and his plan to jettison Net Neutrality, claiming companies like Twitter and other “edge providers” that offer a platform to a diversity of voices are a much bigger threat to an open internet than companies like AT&T and Comcast.

Speaking at the Future of Internet Freedom conference in Washington, Pai faced down the torrent of criticism that has been expressed about his plans to roll back Title II enforcement of ISPs and Net Neutrality rules that protect internet content from discriminatory behavior. In remarks to the audience, Pai used partisan framing to criticize companies like Twitter that he claims have targeted bans on conservative users who violate its terms and conditions and removes tweets for political reasons.

“Now look, I love Twitter, and I use it all the time,” Pai said. “But let’s not kid ourselves; when it comes to an open internet, Twitter is part of the problem. The company has a viewpoint and uses that viewpoint to discriminate. As just one of many examples, two months ago, Twitter blocked Rep. Marsha Blackburn (R-Tenn.) from advertising her Senate campaign launch video because it featured a pro-life message. Before that, during the so-called Day of Action [to preserve Net Neutrality], Twitter warned users that a link to a statement by one company on the topic of internet regulation ‘may be unsafe.’  And to say the least, the company appears to have a double standard when it comes to suspending or de-verifying conservative users’ accounts as opposed to those of liberal users.  This conduct is many things, but it isn’t fighting for an open internet.”

Pai also used additional examples of “edge provider” censorship that he claims targets conservatives far more often than liberals:

• Apple’s app store bars apps from cigar aficionados as promoting tobacco use
• YouTube “restricts videos from the likes of conservative commentator Dennis Prager on subjects he considers ‘important to understanding American values.'”
• Mysterious algorithms target content to specific users but without transparency and disclosure
• Edge providers champion their own free speech while supporting online censorship at the behest of foreign governments for business reasons.

But Pai’s own statements lacked transparency:

1. Twitter blocked, then rescinded its block, on one sponsored Tweet from Blackburn that claimed in the ad she ‘stopped the sale of baby body parts.’ Twitter declared the ad was inflammatory and violated Twitter’s advertising standards. Other media fact-checkers were less polite, calling her claim false advertising. “No investigation ever found proof of actual tissue sales. The only criminal charges stemming from the videos were filed against antiabortion activist David Daleiden and another activist in California for violations of privacy. Yet to this day, ‘baby body parts’ remain a rallying cry in conservative and antiabortion circles,” according to a Washington Post story. Twitter’s advertising standards differ from its general code of user conduct.
2. Apple’s app store does indeed block apps promoting products deemed harmful to users. There is no financial incentive to block these apps, however. The specific language: “Apps that encourage consumption of tobacco products, illegal drugs, or excessive amounts of alcohol are not permitted on the App Store. Apps that encourage minors to consume any of these substances will be rejected. Facilitating the sale of marijuana, tobacco, or controlled substances (except for licensed pharmacies) isn’t allowed.”
3. Pai suggests YouTube is unfairly restricting Mr. Prager’s videos, but in fact it is only placing advisories on some of his more inflammatory content warning the video may not be suitable for some audiences. YouTube also demonetized certain videos, making them ineligible for pre-roll advertisements, primarily because advertisers do not want to be associated with inflammatory content. But no videos have been censored, blocked, or removed. Anyone can view them by acknowledging the content advisory. Members of the LGBTQ community have also been upset with YouTube for similar actions, so there is scant evidence YouTube’s motives are political and target conservatives.
4. Pai’s ‘mysterious algorithms’ have existed across the internet for years, including Verizon’s “super cookie” and AT&T that extracted more money from customers to switch off its monitoring and tracking software following customers’ internet usage. Pai was highly instrumental in blocking internet privacy regulations that would have forced the kind of disclosure of practices he suddenly objects to now.
5. Pai’s claims about American companies caving in to foreign governments’ censorship policies seem to echo his similar 2015 claim that Net Neutrality also helps authoritarian regimes, as long as one interprets Net Neutrality as a “government takeover” of the internet. “If in the United States we adopt regulations that assert more government control over how the internet operates… it becomes a lot more difficult for us to go on the international stage and tell governments: ‘Look, we want you to keep your hands off the internet. Even if the ideas aren’t completely identical, you can appreciate the optical difficult[y] in trying to make that case,” Pai said. But that argument distorts like a fun house mirror. Pai’s declaration that Net Neutrality is a bad thing is based on his premise it would hand the keys to information control to the government to act as gatekeeper. He prefers trusting private companies to be more reliable and safer gatekeepers than the FCC or the Trump Administration. But that argument puts Pai at war with himself, considering his attacks on edge providers — private companies — for bias and censorship. Incidentally and ironically, he raised many of his 2015 objections on RT — the external television service of Russian State Television.

Pai reserved much of his remarks to attack Hollywood celebrities that occasionally inelegantly promote Net Neutrality with inexact language Pai loves to exploit. Among his targets were Mark Ruffalo, who played Hulk, Cher, and George “Sulu” Takei.

Takei

Pai called out Mr. Takei for his suggestion eliminating Net Neutrality would allow internet companies to further monetize the internet by selling additional packages of services to access certain internet content.

“The complaint by Mr. Takei and others doesn’t hold water. They’re arguing that if the plan is adopted, Internet Service Providers would suddenly start doing something that Net Neutrality rules already allow them to do. But the reason that Internet service providers aren’t offering such packages now, and likely won’t offer such packages in the future, is that American consumers by and large don’t want them.”

But of course that didn’t prevent ISPs like Comcast and AT&T to impose data caps on their customers with scant evidence of their necessity and with purely arbitrary allowances. From this regime of data caps, Wall Street analysts push providers to further monetize internet usage to raise revenue to return to shareholders. What customers want has not had much impact on Comcast’s business decisions, as the record on data caps illustrates. The threat of regulation like Net Neutrality enforcement has cooled enthusiasm for these pricing schemes, however, until recently. In April, after Mr. Pai introduced his Net Neutrality repeal plan, Comcast quietly repealed its self-ban on paid prioritization — internet fast lanes.

In a barely competitive marketplace, what customers want may not count for much if they have few, if any alternatives.

Chip Pickering, CEO of INCOMPAS, which includes as member major Silicon Valley edge providers, called Pai’s speech a diversion from the real issues.

“Chairman Pai’s attack on Twitter is like a boxer losing a fight and taking wild and erratic swings,” Pickering said. “Preventing hate speech and bullying behavior online is not the same thing as allowing cable companies to block, throttle and extort money from consumers and the websites they love. Twitter is an amazing platform for left, right and center. Donald Trump might not be President without it, and Chairman Pai’s plan to kill Net Neutrality will put Comcast and AT&T in charge of his Twitter account.”

Stephenson

AT&T’s top executive has found himself uncomfortably caught in a political fracas pitting Trump loyalists who want to punish CNN, career staffers that claim they are genuinely concerned about the media concentration that would result from AT&T’s multi-billion dollar acquisition of Time Warner, Inc., and Trump critics rushing to defend whatever they perceive the administration is against.

A frustrated Randall Stephenson, AT&T chairman and CEO, appeared at The New York Times Dealbook Conference in New York Thursday to talk about his astonishment that the company’s merger has become a public political hot potato that theorizes on President Donald Trump’s active dislike of CNN and opponents of the president who suspect the Trump Administration is attempting to punish the news media for its negative coverage of the president.

“I have never been told that the price of getting the deal done was selling CNN, period. And likewise I have never offered to sell CNN,” Stephenson said, refuting rumors that emerged in a Financial Times piece on Wednesday that claimed AT&T would have to dump CNN to get its merger deal approved. “There is absolutely no intention that we would ever sell CNN.”

While repeatedly stressing his conversations with the Department of Justice were strictly confidential, Stephenson was willing to publicly deny that CNN was ever discussed as part of the merger review. Stephenson was not so willing to comment on rumors the DoJ was seeking a divestiture of DirecTV, which AT&T acquired for $48.5 billion in 2014.

Stephenson declared it “makes no sense” to sell CNN or Turner Broadcasting, the Time Warner-owned division that runs TBS, CNN, Headline News, TNT and other cable channels.

“There is a lot of information and data that we think can be used to stand up a new advertising business,” Stephenson said. “Pairing that with the Turner advertising inventory is a really powerful thing, we believe. That is what we aspire to do. Selling CNN makes no sense in that context.”

AT&T CEO Randall Stephenson: ‘I have never been told that the price of getting a deal done was selling CNN’ from CNBC. (2:19)

The political backlash that has since emerged may actually help AT&T’s PR effort to win approval of the deal as Trump critics now rush to defend AT&T as a victim of presidential authoritarianism.

Bloomberg News published an editorial this afternoon calling for the merger to be approved just to stick it to the Trump Administration:

You don’t have to be a fan of the merger to realize that there is something seriously wrong here. As others have noted, the merger appears to be in trouble for a worrisome reason: President Donald Trump hates CNN and wants to inflict some punishment.

That Trump has long opposed the merger is hardly a secret. During his campaign, he said that if AT&T and Time Warner were allowed to combine it would “destroy democracy.” He put out a campaign statement vowing to “break up the new media conglomerate oligopolies” that “are attempting to unduly influence America’s political process.”

As for his antipathy towards CNN, it’s been a running subplot ever since he decided to run for president. He bashed the station all through the campaign and hasn’t let up as president, accusing it of being one of the media outlets that trafficks in “fake news.” A few months ago, he shockingly tweeted an image of a train running over a CNN reporter.

Trump has every right to oppose the deal and to criticize CNN; as they say, it’s a free country. But he doesn’t have the right to bend the Justice Department to his will. Yet that appears to be what is happening. That antitrust expert who said last year that the deal didn’t pose any problems? Makan Delrahim is now the head of the Justice Department’s antitrust division. And wouldn’t you know it: He’s suddenly had a change of heart about the antitrust implications of the deal.

[…] It is appalling that the Justice Department’s antitrust department appears poised to do Trump’s bidding. The good news is that AT&T has vowed to go to court if the government tries to block the merger. So far, the judiciary has been the branch of government that has stood up to the president’s authoritarian impulses. I never thought I would be rooting for two very big companies to combine into one giant company, but I am. If the AT&T-Time Warner merger goes through, it will mean that the rule of law has won. At least for now.

AT&T couldn’t be luckier if the deal becomes a referendum on whether the Trump Administration is opposing the deal as part of a personal political dispute. Suggesting it is “good news” for AT&T to go to court to win its merger may make AT&T feel better, but ordinary consumers and ratepayers are once again forgotten in the debate over media consolidation.

AT&T CEO Randal Stephenson: Sale of CNN never came up with Department of Justice from CNBC. (5:45)